Paul Singer On China: Next Stage In China Could Be “Speed bump Or Armageddon” (Letter)

Elliott Management delivered 4.4% to investors from both its main funds in the fourth quarter, a Paul Singer letter to investors reviewed by ValueWalk reveals. All sectors of the fund’s $31 billion portfolio were profitable for the quarter with the exception of protection hedges. A component of the fund’s success can be found in unwrapping complexity, and these markets are duly complex at the moment.

Elliott Management – Modeling markets is tough because not only getting facts correct is needed, but the perception of how markets interpret events is also challenging

In this era of history unfolding before our eyes, modeling market behavior can be cloudy. This is not only due to the thread needle task making the correct analysis of fundamental economic factors, but more recently nailing the market perception of facts.

From Elliott’s point of view, anticipating what’s going to happen with markets is difficult “due to the prospect of significant political change in several places around the world.”

While there exists opportunity for real growth – something Elliott Management founder Paul Singer letter says has not occurred since the global financial crisis (GFC) – the political uncertainty is troubling as is the stock market’s reaction.

“The seeds have been sown across the globe for a variety of large problems,” Singer writes, “with China high on the list for either miscalculation related to some geopolitical foray or a major speed bump in economic and financial engines of growth which have enabled it to accomplish so much in recent decades in terms of prosperity for its people.”